Our current GINI continues to climb toward "nation-destructive" levels—.47+ is an acutely damaging level of income inequality that our policymakers must immediately reverse! Our policymakers need not waste time debating what levels of inequality are optimal until our nation approaches .30.

Continuing to parrot the delusion that America is an "exceptional meritocracy" is dangerous to the extent that it paralyzes our nation or prevents immediate action! Or as more eloquently stated in the above report:

"...In the United States, a longstanding argument against redistributionary policies has been that each person has an equal opportunity to move up the income ladder. Research raises questions about whether Americans’ perceptions of their likelihood of upward mobility are exaggerated. Empirical analyses estimate that the United States is a comparatively immobile society, that is, where one starts in the income distribution influences where one ends up to a greater degree than in several advanced economies. Children raised in families at the bottom of the U.S. income distribution are estimated to be especially less likely to ascend the income ladder as adults..."

If a single graph is capable of explaining much of our current protests, dissatisfaction and societal fragmentation it’s this one:

Our poorest 20% actually lost 6% of the income share during 1996-2006! Incredibly these are the same people our policymakers are currently "piling on" by proposing to further reduce their income share!

Perhaps we can impute the costs of our prisons, mental institutions and other coercive institutions to our poor so their share of our national income is less negative (just sarcasm not an idea).

The good news is that we do not have to accept these pathetic policies—we can demand policies, which decrease income distributional imbalances and thereby decrease both protests, dissatisfaction and societal fragmentation.
UPDATED 11/05/2011Wikipedia, Gini Coefficient

Our nation ranks fourth on the United Nations 2011 Human Development Index (HDI), but that respectable rank plummets a staggering 23 positions when our HDI is adjusted for inequality. Stated differently our 2011 adjusted HDI drops by a steep 15.3% (0.910 to 0.771) percentage points, moving our nation completely out of the very high development tranche.

"...After-tax incomes for the bottom 20 percent would decline by an average of 11 percent, or $1,560 (rounding to the nearest $10). Average after-tax income would fall by 1.2 percent, or $690, for middle-income households.

On the other hand, households in the top 40 percent would be better off on average after the financing is included (relative to a baseline without the tax cuts). Those in the top 0.1 percent would still gain, on average, more than $190,000..."

The hodgepodge of congressional tax proposals, which the Republican Party is branding as a historic tax reform and a great Christmas gift to the middle-class will do little to decelerate American's accelerating middle-class decline.

If corporate America did not create jobs when they could borrow money at near zero interest rate it is highly unlikely that they will use any proposed tax break to create jobs now.

It is difficult to overstate the harm an increasing distributional imbalance has and will continue to inflict on our nation or as more eloquently stated by the IMF:

"...While overall global inequality has fallen in recent decades because of the economic rise of countries such as China and India, inequality within countries has risen sharply, especially in large countries like the United States and China. The Fund warned that excessive inequality could lower economic growth as well as polarize politics..."

The now proposed "tax-framework" tax-plan does little or nothing to cut our increasingly destabilizing inequality imbalances. These imbalances will likely continue to worsen as the bipartisan divide widens and our leaders flounder for consensus.

The same unproved and harmful Republican Party sermons on economic dogma masquerading its wacky financial engineering schemes†, which prophesies growth that "god" could not deliver! These dogmatic prophesies are highly likely to end where its earlier prophesies based on unproved economic dogma have ended, with nation destabilizing debt and dangerously imbalanced wealth-distribution coefficients.

When we handout money to recapitalize (aka rescue) the capitalists from their pathetic cannibalistic ways we call it "helicopter money"! Lets recapitalize our poor and call it a "minimum basic income".

Our religious zealots (some might say wackos) can still pray for our poor and the politicians can still rhetorically crucify them—we can unify all these similar programs under the budget line item "pay not pray or punish"!

...a lot less! These are the (non)taxpayers, which our "new" alt-white-house's budget proposes to help with tax breaks at the price of providing healthcare coverage for an estimated 23 million of our citizens; higher premiums for insuring citizens with preëxisting conditions; and higher premiums for aging seniors...

...and these are the taxpayers, which our "new" alt-white-house OMB Director Mulvaney asserts are not getting compassion...you cannot make this stuff up!

The "distribution of income" graph on top is problematic, but the graph of annualized (1870-2014) per-capita growth below that graph is disturbing because it presages a regressing future for America absent intervention of significant invention!

Those thinking recently hyped technology "shared economy" platforms like Uber, Airbnb etc. will significantly alter Gordon's "bell-shaped graph" will want to study Robert Solow, Paul Romer et al. and take to heart any or all the many variants of a quote oft attributed to Solow:

"you can see the computer age everywhere but in the productivity statistics." (Wikipedia)

Thank you Mr. President,...your presidency has provided many Americans with much pride:

Your successor's leadership and government (regime?) will likely exacerbate America's distributional dilemma and economic growth problems4, in pursuit of its fervent laissez-faire (aka neo-anarchism) and paradoxical efforts to use government to end it!

Plenty of multinational companies and competing nations use financial schemes and shenanigans for competitive advantage*. Instead of criticizing the EU, Treasury Secretary Lew should nominate or name a few or better yet jointly investigate the amount of taxes and penalties owed as a result of their unfair competitive advantage?

* There is a big difference between a nation (or local entity within a nation) setting its own tax policy and using its tax policy to confer a subsidy or unfair competitive advantage!

With respect to "concerns" that Apple will deduct its Ireland tax from any owed our Treasury note that Apple (and other corporations) is engaging in a different set of financial schemes and shenanigans while awaiting favorable U.S. tax treatment (i.e. nominal or zero tax) before repatriating its overseas earnings!

Ayn Rand's apostles and acolytes are not lacking in "strong beliefs"—they lack any theory of realpolitiks, economics, or governance to support those "strong beliefs", except, perhaps chaos and anarchy. Blowing things up might work for novelists, terrorists, libertarians, nihilists, actors, anarchists, and Howard Roark; not so much for democrats, economists, or statists.

It's unimaginative, unbalanced, and unnecessary to blow up government to correct market failures or economic and distributional imbalances.

How "precious", our confused cowboy-capitalists, who have spent the last several decades silently launching and participating in one catastrophic financial scheme after another are concerned about our children's declining share of the economic pie (i.e. our seniors are getting too much)!

Yes, there are capitalists concerned about our children's futures, but they're currently too busy scooping up the shit after the confused cowboy-capitalists' previous parades and figuring out how to sustainably grow the economic pie to lecture the public on a looted treasury.

Unfortunately, it's not an April Fools joke! You can't make this stuff up.

Continuously asserting that distributional imbalances are harming our economy and nation does nothing to reduce or eliminate these imbalances. Our income and wealth imbalances are so grossly large there is little harm in acting immediately, using crude methodology and tools, if necessary, to reduce these imbalances. We can debate the finer economic points of optimal imbalances in a capitalist economy while the imbalances are trending down (as opposed to up)!

Of course perpetually debating how best to achieve a balance between capitalism and confused-corrupt-cowboy-cannibal-carny-casino-capitalism is important. However, this debate, which has continuously occurred since the founding of our nation, need not impede immediate action to reduce or eliminate our grossly large income and wealth imbalances.

It's encouraging that these difficult (different than complex) discussions are finally beginning.

Discussions on how to improve capital distribution need not morph into a bipolar choice between capitalism and socialism. Nor, need these discussions underestimate the benefits of speedily implementing demonstration projects aimed at convincing capital that "God and Darwin" have played no part in creating our current distributional imbalances.

* Piketty response to Giles concerns over the rate at which wealth distribution (Chapter 10) imbalances are accumulating—primarily the result of different interpretations concerning the reliability of the British noncontiguous heterogeneous data sets.

The good news about our nation's current income inequality is that it's enabled us to start an important dialog about inequality and related myths—notwithstanding the many subtle and not so subtle inferences to Darwinism, a money gene has not been located!

That will not dissuade some of our citizenry from sending saliva to 23andMe, cells to a cryonic laboratory or seriously consider whether to preserve their body post-death. It's unclear why these citizens would think future human habitats will require or apply their unique skill set or be constrained by today's myths?

"Data showed that the top 20 percent of Americans received 48 percent of all income while those in the bottom 20 percent got less than 5 percent...In 2011, roughly 23.5 million, or 37 percent, of U.S. children lived in working poor families compared with about 21 million, or 33 percent, in 2007, the report (pdf) said."

By using a macro-measure target like the "gini coefficient" our policymaker are able to completely avoid winner-take-all-politics or accusation of "choosing winners and losers" or engaging endless and mostly useless debates about redistribution.

The "gini" is then discussed and managed in a manner not dissimilar to a discount or unemployment rate.

The result American exceptionalism, survival of the fittest or just decades of pathetic public policy that "hallowed out" our middle-class? Jeffrey Sack talking on The Price of Civilization thinks it's the latter:

Other research confirms Wilkerson et al's linear correlation between a nation's worsening quality of life measures and its increasing income inequality.

Some of our President's critics proudly assert that the difference between knowledge and ignorance is mere opinion and justification for seeking "God's" opinion, which they inform us they routinely do. Hopefully, before bothering "God" they will read Irving Fisher's 1907, "Why Has The Doctrine of Laissez Faire Been Abandoned?" (quoted in part below):

"...The adherents of this school seemed to treat the difference between knowledge and ignorance as a mere difference in opinion, with which the government has no more concern than with difference of religious creeds. It is certainly true that the attempts of governments to impose what is regarded by the ruling class as the 'true religion' upon the entire people have always proved ill-advised; the recognition of this has produced the modern sentiment of religious toleration. But we are carrying toleration too far when we refuse to correct errors which science demonstrates to be false. There are doubtless millions of persons to-day who jeer at the idea that indiscriminate spitting is dangerous to public health, but it would be silly to allow their ignorant prejudice to prevail. The bacteriologist knows what the ignorant do not know, and every effort should be made to pass down this knowledge to the masses as soon as possible after it is discovered. We can not let any dogma of laissez faire prevent us from checking suicidal ignorance...."--Fisher, Laissez Faire 1907--

Paper makes the correlation between inequality and length of growth period—a decrease in the Gini from .40 to .37 is expected to lengthen the growth period by 50 percent.

It goes on to make the fascinating observation:

"...Second, the efficacy of some standard policy recommendations may depend on forces related to distributional issues. It may be simultaneously true that inadequate regulation lay behind the financial crisis in the United States and that increasing inequality underlay the pressures on lenders and borrowers to overleverage. Better analysis of macroeconomic and financial sector linkages, and thus more appropriate regulation, can surely help. But such analysis cannot ignore the larger context of rising inequality if it is to yield useful policy advice...."--Inequality and Unsustainable Growth--

The above correlation and observation would seem to favor President Obama's strategy to prevent our acute distributional issues from becoming chronic.

How ironic that our policymakers, so practiced at yelling "class warfare"2 and enacting policies that exacerbate our distributional inequalities are in fact truncating the very growth their yelling and policy seeks to create and sustain, thereby jeopardizing our nation.

1. When discussing or thinking about national inequality distributions and policy, measurements of income, wealth, GDP, GNP, and other economic indicators are often unhelpfully conflated with measurements of that nation's citizens.

2. One suspects that managing an economy that maintains equilibrium between incentives and inequalities requires policymakers with a different skill set.